By Yes, I know, easier said than done and a pretty obvious statement to make but all the same in a market place where transactions are down by over 50% from the peak in 2006, this is an absolute business necessity.
Why do I make this point? Because I am regularly hearing feedback that many agents are over valuing and then, if that wasn’t bad enough, are still significantly undercutting fee levels!
Whilst some agents may have a perverse aversion to making a profit, or some other weird excuse which I will forever battle with, unless your business is showing a reasonable return you are always going to struggle to fund the costs of the essential ongoing development needed to stay in business, and in these times of change, that means eventually you are going to fail.
Anyway, back to the point.
There are some important reasons why you need to hone your skill at winning saleable listings at sensible commission levels. Why?
Sellers are expecting more for less. It’s hard to offer supreme service for cut-price returns. No business can maintain profit levels and still deliver the full range of marketing tools and exposure needed to sell for the best price possible if they are reducing their charges.
It hurts our profession. The more we advertise cut-price deals, the more we are lowering the perceived value of our services to the consumer. Estate agency in the UK already suffers from low perceived standards and when we lower our commissions, we are lowering our standards further plus if the only way you can win a listing is to lower your fees then, in my opinion, you need to start looking at yourself in the mirror.
If you’re good then you deserve to be paid well. I became an estate agent for a lot of reasons, but one of them was because I wanted to make good money so I could accomplish other things in my life. The agents that I know who are being successful in this market are not only highly experienced and extraordinarily good at what they do; they are working very, very hard. They deserve to get paid well – besides they owe it to their families for the long hours they are away from home!
Smart people charge what they’re worth. And that counts for something even if you’ve only been in estate agency for a matter of weeks. Think about it, you are as hungry and enthusiastic to succeed and make a name for yourself as you could ever be, you bring a freshness to the profession AND you aren’t distracted by lots of outside influences so you can commit time and energy to serving your clients well. Conversely, even if you are in the last few months before retirement your aggregated experience, knowledge, expertise and contacts are almost immeasurably valuable. Why under charge when you have so much to give?
You also have to believe that you have so much extra advantage to deliver to that client – over and above anything that they could achieve for themselves as a private seller (see my piece on www.facebook.com/interouk date 1.5.11) or your cut-price competitors.
I was at an NAR conference some years ago when I heard it said that the commission conversation doesn’t start at the end of your presentation, it starts at the beginning; in terms of the better your presentation, the greater your level of confidence and skill, the better the rapport you create with the seller, then the easier it is to earn a bigger commission.
I’ve read lots of research on what makes people buy (and not just in the estate agency arena) and very little of it refers to price being the number one consideration, in fact often it isn’t even in the top five.
As good an analogy I can think of is that if you were gravely ill, you wouldn’t choose the medical specialist you appointed to save your life on fees alone. You would look for the best skilled, best equipped and perhaps more than anything, the one who gets the best results.
Another helpful way in which you can elevate the value of your services is to focus on how you market your listings as opposed to how you advertise. Anyone can advertise – private sellers can quite easily advertise their home for themselves – but high quality marketing is a an altogether different matter where it’s the advantage of the unique tools that you have and the level of exposure you are able to deliver that count.
Your mindset must be one of attracting sellers based on the value you offer and not what you charge. If your homeowner client is fixated on this, then you need to educate them before you can even start talking fees. To do this, you need to make sure that you have some USP’s and some points of differentiation in terms of your marketing.
People skills are, of course, very important but never forget that people also buy brand. Whether it’s the car they drive, the airline they fly with or the golf clubs they play with, brand has an enormous effect in buying decisions.
Another analogy. If you were on a listing and wanted to make that point then ask your vendor to go to the fridge and pull out, say, a bottle of ketchup or mayonnaise – if they have anything other than a brand name such as Hellman’s or Heinz then I’d be very surprised. If that’s going to be a risk, pick out something else around their home as an example where brand has obviously made a difference.
Let’s also not forget the point that at the end of the day, from the sellers point of view it really isn’t even about how much commission the agent charges, it’s about how much they net and whether this is achieved in their objective timescale. Even the most difficult vendor is going to struggle to argue with the fact that better marketing isn’t going to result in a better price and speedier transaction.
There are countless training modules on this subject with some clever techniques and phrases that will help you earn better commissions and I do hope that this article has been of some assistance. So far as I see it, however, ultimately the key consideration, it is you, your approach and in particular your attitude that will win the day.
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